Organization: Enron - Essay Example

Teacher Organization: Enron The importance of core management functions such as planning, organizing, leading and controlling cannotbe more emphasized when their proper use are violated that could lead to a company’s demise. This was the case of Enron which this paper took a special interest because it showed that misuse of this core functions in management could result into the organization’s demise and in the case of Enron, even imprisonment of its executives. The four core functions of planning, organizing, leading and controlling at Enron. a. Planning Planning is the stage where the vision of an organization is translated in setting the blueprint of the business direction. As a business entity, It is just but natural for every business enterprise to plan on how to increase its profitability. After all, for a business to remain a going concern, it has to make decent profit to fulfill its obligation to its various stakeholders that include its investors, its management and its employees. But when profitability becomes the sole motivation of business to the point of greed and disregard other consideration in conducting itself as a business enterprise, is where the problem begins. Planning is supposed to involve the strategies, markers, resources needed to achieve its vision and objective. This vision and objective involves profit but not to disregard all other aspects of the business such as contributing to the greater good of the community, being fair to its shareholders and not betraying the goodwill of its customers. In the case of Enron, its planning was myopic and improper because it only concerned itself with profit by increasing the valuation of its stock price at whatever means possible which involved fraud. What Enron could have done at its planning is to include the roadmap on how to make profit by including how to create value and various strategies that would improve its competitiveness in the market that will ultimately realize its economic objectives. b. Organizing Organizing is the effective marshaling of an organization’s resources to achieve its objectives. This function typically follows the core function of planning that reflects how the organization would accomplish its objectives. Organizing entails putting up organizational structures, systems and other management implements and tools that defines responsibilities and how to use its resources that would enable the organization to realize its goals and objectives as stated in the planning stage. This involves the effective procurement and arrangement of human resources functions that would enable to realize the objectives of the business. Enron was initially effective in the core management function of organizing. It hired the best and brightest employees and provided them the tools to become effective in their respective responsibilities. This proper used of organizing function used to enhance the performance of Enron’s employees that it became one of the largest businesses in the world. This took into twisted turn when Enron inadvertently organized its human resource to become unethical when its management employed a stack ranking system where employees will arbitrarily rank each other and those who are in the lowest ranking will be fired. This created a new method of “organizing” in Enron because instead of employees being marshaled and grouped into effective unit that would optimize performance to achieve the organization’s goals and objectives, it was organized into allies and enemies in their effort to save their own skin during stack ranking. c. Leading Leading is a core management function whereby employees are inspired to follow the direction set forth by the management to achieve the organization’s objectives. Management can inspire employees through a various means of motivational implements that would make perform their best. In Enron however, leading took a twisted turn when it became obsessed with increasing the value of its stock prices. Its sense of excellence also became crooked as reinforced and perpetuated by its leadership. Instead of inspiring, the leadership of Enron instilled fear and callousness among its employees to perform. It promoted a corporate culture of callousness when it arbitrarily ranked half of its employees as non-performer which it will eventually fire. The other half remaining may have remained in the company but adopted a corporate value system that is virulently greedy and fraudulent as promoted and reinforced by its leadership through its arbitrary performance appraisals. What could Enron have done was, instead of forcing its employees to arbitrarily rank other employees to be low performer, Enron should have promoted a culture of excellence and integrity; to continuously look for ways to improve and to stretch their capabilities and not the ability to survive in a dog eat dog environment. What Enron did instead was sow fear as the motivation among its employees to perform and made them ruthless as a result of a callous leadership that arbitrarily fired half of its employees that it perceived to be performing below par or not as ruthless as they should be. d. Controlling Controlling is a function used by management to ensure that their performance is in accordance to its objectives. Controlling as a tool provides a business organization feedback on where it stands compared to its objectives and apply remedial measures when they are off track. Enron as an organization used stack ranking as its controlling mechanism for its employees to perform at their optimum and to ensure that they only retain the best employees by firing those who are in the bottom of the stack ranking. Read More